Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:
- Sales are budgeted at $360,000 for November, $380,000 for December, and $350,000 for January.
- Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible.
- The cost of goods sold is 65% of sales.
- The company purchases 60% of its merchandise in the month prior to the month of sale and 40% in the month of sale. Payment for merchandise is made in the month following the purchase.
- Other monthly expenses to be paid in cash are $21,900.
- Monthly depreciation is $20,000.
- Ignore taxes.
Statement of Financial Position
October 31
Assets
|
Cash
|
$ 16,000
|
|
Accounts receivable
|
|
|
(net of allowance for uncollectible accounts)
|
74,000
|
|
Inventory
|
140,400
|
|
Property, plant and equipment
|
|
|
(net of $500,000 accumulated depreciation)
|
1,066,000
|
|
Total assets
|
$1,296,400
|
Liabilities and Stockholders' Equity
|
Accounts payable
|
$ 240,000
|
|
Common stock
|
640,000
|
|
Retained earnings
|
416,400
|
|
Total liabilities and stockholders' equity
|
$1,296,400
|
Required:
a. Prepare a Schedule of Expected Cash Collections for November and December.
b. Prepare a Merchandise Purchases Budget for November and December.
c. Prepare Cash Budgets for November and December.
d. Prepare Budgeted Income Statements for November and December.
e. Prepare a Budgeted Balance Sheet for the end of December.